Henry Broderick, Inc. v. Riley, 29431.

• Decision Date: 13 April 1945
• Docket Number: 29431.
• Citation: 157 P.2d 954,22 Wn.2d 760
• Court: Washington Supreme Court
• Parties: HENRY BRODERICK, Inc., v. RILEY, Com'r of Unemployment Compensation and Placement.

157 P.2d 954

22 Wn.2d 760

HENRY BRODERICK, Inc., v. RILEY, Com'r of Unemployment Compensation and Placement.

No. 29431.

Supreme Court of Washington, En Banc.

April 13, 1945

Proceeding on petition of Henry Broderick, Inc., for hearing on the assessment by E. B. Riley, Commissioner of Unemployment Compensation and Placement for delinquent contributions to the unemployment compensation fund. From a judgment affirming the decision of the commissioner which in turn affirmed decision of the appeal tribunal holding that certain real estate brokers were employees of petitioner, within meaning of Unemployment Compensation Act, petitioner appeals.

Reversed with instructions.

MALLERY GRADY, and BLAKE, JJ., dissenting.

Appeal from Superior Court, King County; Robert M Jones, judge.

Eggerman Rosling & Williams, of Seattle, for appellant.

Smith Troy and George W. Wilkins, both of Olympia, for respondent.

JEFFERS Justice.

This proceeding was instituted by the department of unemployment compensation and placement against Henry Broderick, Inc., on April 13, 1943, by the service on that date of an order and notice of assessment demanding payment from Henry Broderick, Inc., of the sum of $4,129.07, as delinquent contributions due the unemployment compensation fund for the period of March 16, 1937, to and including March 31, 1943.

As stated in the brief of the commissioner of unemployment compensation and placement, such contributions were assessed on the contention of the commissioner that certain real estate brokers were performing services which constituted 'employment' for Henry Broderick, Inc., and that the corporation was liable for contributions based on commissions earned by such brokers.

Henry Broderick, Inc., hereinafter referred to as appellant, filed a petition asking for a hearing on such assessment, stating and contending that such brokers are not in 'employment' of appellant, but are co-principals with appellant in joint adventures in the rental, lease or sale of real estate. The matter came on for hearing Before the appeal tribunal, which thereafter made and entered its findings of fact, conclusions of law and decision. The appeal tribunal concluded that the brokers here involved are performing services for appellant for wages as that term is defined in Rem.Rev.Stat. (Sup.), § 9998-119(m), now Rem.Supp.1943, § 9998-119m, and must be considered in employment subject to the act unless it is shown that they are exempt because of the exceptions contained in Rem.Rev.Stat. (Sup.) § 9998-119(g)(5), now Rem.Supp.1943, § 9998-119g(5).

The tribunal further found that appellant had failed to establish that the services of the brokers come within any of the exemptions contained in the subsection last above referred to; that their services constitute 'employment' under the act, and 'that contributions are properly assessable on the remuneration payable to them for the period in question.'

Appellant thereafter filed its petition for review by the commissioner, alleging that the appeal tribunal's findings of fact are not complete, and that its conclusions of law are not supported by the evidence and are contrary to law. Appellant's argument in support of the petition is attached to the petition and by reference made a part thereof.

On October 13, 1943, the commissioner made and entered his decision, wherein he adopted the findings of fact and conclusions of law of the appeal tribunal, and affirmed its decision. An appeal was taken to the superior court for King County, which court, after a review of the record and after hearing argument, entered judgment affirming the decision of the commissioner. From the judgment entered on May 6, 1944, Henry Broderick, Inc., has taken an appeal to this court.

It is contended that the court erred in sustaining the decision of the commissioner that the service constituted 'employment' within the meaning of the act; in determining that the commissioner correctly construed the law and that his determination was neither arbitrary nor capricious; in determining that appellant failed to meet the requirements of Rem.Supp.1943, § 9998-119g(5), (i) and (ii); and in rendering judgment for respondent and against appellant in the sum of $4,129.09, interest and costs, or in any sum.

The evidence in this case is not disputed, and all comes from witnesses called, and exhibits introduced by appellant.

Henry Broderick has lived in Seattle forty-two years. He began business for himself in 1908, and appellant was incorporated by him in 1911. Appellant is a licensed real estate broker, and is engaged in many activities in connection with the management, rental, leasing and sale of real estate. Appellant also has an insurance department. It has been continuously engaged in the real estate business in Seattle for about thirty-five years.

Appellant has in its employ six real estate salesmen, who are directly under the supervision of Mr. Baird, vice-president. Mr. Baird'd specific duties pertain to supervising the property management department. A part of the duties of the salesmen consists of looking after the property which appellant manages, of renting space, collecting rents, and supervising maintenance work. These salesmen each have a salesman's license procured from the state. Appellant pays for the procuring of such license, and pays the premium on the bond required by the state. Appellant holds sales meeting every morning, and the salesmen are required to attend. They report on their activities for the previous day, and report on assignments which they have been given. The salesmen are under the direct supervision and control of appellant, the same as a bookkeeper or any other employee. They devote about twenty-five per cent. of their time to sales activities, and seventy-five per cent. to property management. In so far as their connection with sales is concerned, if they are assigned to a prospect they are required to call upon him and report back to appellant. They pay no part of the sales expense in connection with any sale they may make or attempt to make.

The salesmen are paid a stipulated salary semi-monthly, and in addition, if they have been responsible for a sale from which a commission comes to appellant, they receive a bonus of forty per cent. of such commission, which commission is paid at the same time the salary is paid. Any commission coming to appellant by reason of the activities of the salesmen, goes directly into the profit and loss account of appellant. The salesmen receive a salary whether they make a sale or not. It is admitted that these salesmen are in 'employment' under the act, and the evidence above set out was introduced for the purpose of contrasting the relation between appellant and its salesmen, and its relation with the real estate brokers involved in this proceeding.

It appears from the testimony of Henry Broderick that from the time he began operations as an individual, and since the organization of appellant, the same association has been maintained with other brokers as has been maintained with the brokers here involved.

In 1938 appellant had a written contract prepared (App. Ex. 1), and thereafter any broker associated with appellant was required to sign this contract. This contract, according to Mr. Enge, treasurer of appellant, embodied exactly the same relationship that had existed between appellant and associate brokers, and was not intended to establish a different relationship between appellant and associate brokers, but to clarify the association to third parties who might for some reason be interested in what the association between appellant and these brokers was.

The contract in part provides that the parties respectively warrant that they are licensed and authorized to act as real estate brokers in the state of Washington, and each agrees that during the term thereof he will keep his license as a broker in full force and effect at his own expense, and will pay all fees and taxes due the state, county or municipality arising out of his activities as broker, and neither shall be liable for the fees or taxes of the other. Failure on the part of either party to keep in effect his license as a broker shall automatically terminate the agreement.

It is agreed that first party (appellant) is duly qualified to and does procure the listing of real estate for sale, lease or rental, and prospective purchasers, lessees and renters therefor, and has and enjoys the good will of, and a reputation for fair dealing with, the public. First party also has and maintains an office properly equipped with furnishings and staff, suitable to serving the public as a real estate broker, and the parties deem it to be to their mutual advantage to form the association agreed to. First party agrees to furnish second party a desk, with use of a telephone, at first party's offices now located at Second and Cherry street, and to furnish switchboard service, including taking of calls for second party pertaining to the services referred to. First party will also furnish second party with such reasonable and necessary stenographic service as may be required for carrying out second party's portion of the argeement. It is understood that first party advertises extensively, and that second party will, at first party's discretion, be mentioned in such advertising.

First party agrees to make available to second party all current listings of the office, except such as first party may find expedient to place exclusively in the temporary possession of some other broker, and first party agrees to assist second party in his work by advice and full cooperation in every way practicable. First party has within its organization experts in various fields pertaining to real estate, and...